Tech Sell-Off Deepens: Is AI the Modern Dot-Com Bubble?
US stock markets experienced a significant downturn on Thursday, February 12, 2026, as concerns surrounding the impact of artificial intelligence (AI) on various industries intensified. The S&P 500 fell 1.6%, although the Nasdaq Composite retreated 2%, extending a period of volatility. This sell-off mirrors anxieties reminiscent of the dot-com bubble, raising questions about whether current valuations of AI-driven companies are sustainable.
Considerable Tech Takes a Hit
Leading the decline were major technology companies. Apple saw a 5% drop in its share price, while Meta and Amazon experienced declines of 2.8% and 2.2% respectively. The losses weren’t limited to these giants; Cisco’s stock tumbled 12.3% after missing profitability expectations, and AppLovin, an AI-focused mobile app developer, plummeted 19.7% following its earnings report.
Flight to Safety: Treasuries and Precious Metals
As equity markets faltered, investors sought refuge in safer assets. Treasury prices rallied, pushing the 10-year yield down to 4.11%, its lowest level this year. Demand for 30-year bonds at auction reached record levels, with primary dealers absorbing the smallest percentage of the offering on record. However, even traditionally safe-haven assets weren’t immune, with gold falling 3.2% and silver dropping 11% as investors liquidated positions to raise cash.
AI Disruption: Beyond Software and Wealth Management
The current market unease stems from growing fears that the rapid advancement of AI tools could disrupt a wide range of industries. Concerns extend beyond software and wealth management to sectors like freight brokerage, as evidenced by the 24% drop in trucking company CH Robinson Worldwide’s stock. Investors are questioning the timeline for returns on the massive investments being made by “hyperscalers” in AI technology.
Small Caps and the Rotation to Value
The Russell 2000 small-cap index, which had recently benefited from investors shifting away from large-cap tech stocks, also experienced a sell-off, falling over 2%. This suggests a broader market correction rather than a sector-specific event. Investors appear to be reassessing risk and seeking value in unloved corners of the market.
Inflation Data Looms Large
Market participants are now keenly awaiting the release of US inflation data on Friday, February 13, 2026. Economists predict a decline to 2.5% from December’s 2.7%, which could provide further clues about the future path of interest rates. Jason Borbora-Sheen, a portfolio manager at Ninety One, noted that the market is “trigger-happy” and reacting to every perceived “threat from AI,” suggesting that the inflation report could be a key catalyst for further market movement.
Frequently Asked Questions
What is driving the recent market volatility?
Concerns about the potential disruptive impact of AI on various industries, coupled with uncertainty about the timing of returns on AI investments, are driving the volatility.
Are we in a new “tech bubble”?
The current situation shares similarities with the dot-com bubble, with high valuations for AI-driven companies. Whether it constitutes a bubble remains to be seen, but investors are exhibiting increased caution.
What is the significance of the Treasury rally?
The rally in Treasury prices indicates a flight to safety as investors seek less risky assets amid market uncertainty.
Pro Tip: Diversification is key during periods of market volatility. Consider spreading your investments across different asset classes and sectors to mitigate risk.
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